BA/AA Deal Goes Through: Open Skies On The Way?

[The Guvnor]

From the Evening Standard. I have to admit that this deal does not give me a warm fuzzy feeling; and I suspect that the EU will have a few things to say about the UK opening its skies unilaterally! :eek:

BRITISH Airways chief executive Rod Eddington is poised to announce a crucial tie-up with American Airlines on transatlantic routes on 7 January.

The deal, which BA believes will transform its prospects on key routes between the UK and America, has been secured after the personal intervention of Tony Blair.

The Prime Minister's strong backing for President Bush's war on terrorism gave added impetus to the agreement, which the airlines have been trying to reach for five years.

BA, whose passenger business fell nearly 18% last month, plans to share nine key transatlantic routes with American Airlines. The carriers already work together and claim the new deal will mean more frequent flights and a better service.

An announcement in the New Year that the US Transportation Department will exempt the two airlines from US anti-monopoly laws will coincide with statements from Washington and London that an 'open skies' agreement has been reached, say sources.

Open skies means new operators will be able to fly between Britain and America. That should mean a greater choice of flights and, possibly, lower fares.

January 7 has been earmarked as a likely date for the joint announcement, but officials admit that the Transportation Department may need more time to examine a bulky submission from Virgin Atlantic and US airlines, including Northwest and Continental.

A British aviation official said: 'We expect the Department to approve the application for anti-trust exemption and we expect an open skies agreement to be reached by early January. These developments will be announced simultaneously.'

Experts said the US had reversed its decision of five years ago - when the alliance first sought anti-trust immunity - because of shifts in the pattern of world aviation.

Jon Ash, managing director of the Global Aviation Associates consultancy in Washington, said: 'They were able to show that expansion of the alliance would not upset the balance among carriers. Also, Prime Minister Blair helped by asking President Bush in person that the deal be done.

[ADC]

Hey, Guv, we've all heard form South Africa on what does give you a warm fuzzy feeling , eh? :)

[jumbodriver]

and this.....
LONDON (FTMW) - British Airways is considering cutting up to 10,000 more jobs in a bid to cut costs and avoid financial disaster, according to a report in the Observer on Sunday.

Another report suggested the airline was close to securing its long-sought alliance with American Airlines (AMR: news, chart, profile).

The Observer said the jobs cuts plan emerges from a study called 'The future Size and Shape Project' and will likely be released early next spring.

British Airways (UK:BAY: news, chart, profile) has already announced 7,000 job losses this year from its 57,000 strong workforce and cut routes after the US terror attacks in September and a global slowdown.

Currently British Airways is losing more than £2m a day and could post losses of £750m for the year, the Observer said.

Taking a close look

If British Airways does follow through on the plans, it would also close loss-making operations in several parts of the United Kingdom and slash its remaining European routes by up to half, the newspaper added.

According to the paper, a senior British Airways (UK:BAB: news, chart, profile) source said the carrier was considering cuts because it realised it had to look more closely at where its money was going.

"Should we be flying to all those places where we do not make money - is it because BA wants to paint the world red, white and blue or is it behaving like a business? These issues have to be addressed and we are looking at the totality of the business."

Unfounded

However, Paul Parry, a spokesman for BA, said that while there was a review underway nothing had been finalised.

He called the job cut estimates "completely unfounded" and noted that the review was still at a very early stage. "Nothing's been decided," he told FTMarketWatch.

Parry added that the review had been announced publicly four weeks ago.

Joining forces

Separately, The Mail on Sunday reported that BA had sealed a deal to join forces with American Airlines (AMR: news, chart, profile).

The partnership would see both airlines share transatlantic routes and was secured with the personal intervention of UK Prime Minister Tony Blair, according to the paper.

Rod Eddington, chief executive of BA, will announce the deal on January 7 but first it has to be approved by the US Transportation Department, the Mail on Sunday wrote.

It's also expected that the New Year will see statements from Washington and London announcing an 'open skies' agreement between the UK and the US.

That would allow new carriers to fly between the two countries, which in turn should lead to better prices and more choices for consumers. That announcement is also expected on January 7, the paper said.

BA shares closed at 223.75p on Friday.

[stickshake]

Guv,

Sorry mate but I've got you all wrong, you really are capable of making me happy with one of your posts.....

BA/AA approved, yipee, hooraa.....

Guv not feeling warm and fuzzy, yipee, hooraa.....

rgds

Shakey
(just joshing with you Guv)

[geeza]

Well, I guess that's good news from bmi's point of view. Bishop's Dream of flying trans atlantic may finally be coming true and hopefully reduce the the size of the 109 club!! :)

[moggie]

Shakey - are you the shakey who was on 69 (breath through your ears) BFTS course at L-O-O in 1984?

[411A]

Those who bemoan the fact that BA is reducing or eliminating unprofitable routes...well if they don't, the competition will eat them for lunch. Suspect that BA needs to reduce the size of the fleet by at least one-third...and with a tieup with AA...probably will.
An airline does NOT exist to make profits for pilots, cabin crew, and middle-managers, 'tis the shareholders that count, like it or not.
Very simple really...costs go down...or go away.

[Raas767]

I'm sure the fact that Don Carty is a personal friend of the Bush family, that he contributed (through AMR) a 100 000 dollars to George's campaign, and gave him a 737 to campaign with had absolutely nothing to do with the approval of AA/BA! Old sir Richard must be screwing himself in to the ceiling! :D

[Recover]

I'm still trying to understand how Open Skies will benefit European airlines.

To my mind it would open up a few more destinations in the States to relatively few intertested parties. Sure BMI will get to do their thing, but as far as the UK is concerned, anyone else want to fly across the Pond? Looking futher afield, who else in Europe wants to fly more to America?

Couple this with the huge fleets of UAL & AA etc and I think we're going to get crushed in the rush of Amercian aircraft flooding the European skies. That may sound a bit exagerated, but I'm genuinely concerned on the loss of European jobs over this whole deal.

On a personal note, I'd rather not see AA joining us (BA). With their excellent scope agreement and our lack of one it will take just a few weeks and we'll find ourselves unable to fly AA routes while they will be flying ours. It sucks. The last vestiges of customer loyalty will be wrecked when BA customers arrive to find themselves enjoying (?) the comforts of AA cabin crew and their renowned customer service.....NOT.

How do you spell Emirat.....


And.....

Recover

[The Guvnor]

Recover - you've got it. The US definition of Open Skies is one tilted 90 degrees in their favour. Let's see if they are willing to get rid of their basitions of protectionism, including:

1) Cabotage
2) Wet leases to US carriers
3) Abolition of Fly America

If they do, I'll give up PPRuNeing! :D :eek: :D

It's a good deal for BA because it saves their corporate necks. It's a really bad deal for every other UK airline.

[Raas767]

Guv.
Why on earth should the U.S give up cabotage? As if the Europeans would let any U.S. carrier fly domestic destinations within any one country. Even if they did, so what? The U.S is the largest passenger market on earth and I'm sure it's everybodys wet dream(including yours) to fly domestic pax point to point in the U.S.
Nobody else has anything remotely as appealing as that to bring to the table. Even if U.S. carriers were aloud unlimited 5th. freedom rights in every country on earth would that make competitve sence. You are right, it ain't gonna happen. ;)

[Raas767]

Recover.
Not that I realy care, but I have flown a lot on BA and your inflight service isn't much to write home about either. At least not in Economy class.
Don't wory about losing flying to us. In my experience it usually works the other way around, our scope clause not withstanding. In just about every case I can think of we have lost flying to our code share partners.
TAM, Canadian, Eagle, Iberia, former Sabena.
I'm sure Speedbird will be no different.

[renegator]

Would certainly be interesting for the UK carriers. Price level on North Atlantic from the UK is way to high compared to European Standards and the carrier most relying on that if Virgin Atlantic. Based on figures from OAG, they rely to 70+% on North Atlantic. Let´s see what open sky will bring to them, competition at least.

silversurfer

[dusk2dawn]

What happened to the commission' case against the member countries with open skies agreements ? Wasn't it scheduled to be finished in september ?

[flyingfrog]

bmi have just posted on there website, that they are confident transatlantic services will start in 2002 from LHR.
www.flybmi.com (http://www.flybmi.com)

[dallas dude]

Recover, you wrote..

On a personal note, I'd rather not see AA joining us (BA). With their
excellent scope agreement and our lack of one it will take just a few
weeks and we'll find ourselves unable to fly AA routes while they will be
flying ours. It sucks. The last vestiges of customer loyalty will be
wrecked when BA customers arrive to find themselves enjoying (?) the
comforts of AA cabin crew and their renowned customer
service.....NOT.


If you take the time to review the agreement you'll discover that BA actually has the upper hand on who does the flying between the nine joint agreement routes.

There is an equipment ratio that favours BA and AA may only add extra frequencies AFTER BA has "grown" accordingly.

As for the cabin service comment, no airline can afford to rest on its laurels, BA included.

Cheers

[Suggs]

Are they going to equalise the pilot pay?

Fingers, toes, eyes, etc all crossed.